Interview: Economic consequences of co-existence and traceability

Morten Gylling is Senior Adviser at the Danish Institute of Food and Research Economics in the Production and Technology Division. His research focuses on the economic aspects of co-existence and traceability. Gylling is also workpackage leader at Co-Extra. In this interview he explains what co-existence and traceability have to do with economics, and what are the goals of Co-Extra WP3.

Morten Gylling, leader of Co-Extra WP3WP3 of Co-Extra investigates the economic aspects of co-existence and traceability. What are the main objectives of your research?

Our main objectives are to assess the additional costs and benefits of the new EU regulations for traceability and labelling of GMOs in food and feed supply chains. Also, we investigate and describe the European consumers' attitudes to GM-labelling and identify the economy-wide impact of the consumers' reaction on the EU traceability and labelling regulations.

Which are the hot spots along the food and feed supply chains WP3 focuses on?

We will focus on hot spots both within elements and between elements in the supply and processing chains. An example of a hot spot could be the handling of crops at the elevator.

The handling of crops at the elevator is a very important hot spot including several elements like control of transport vehicles, documentation of lots, handling at reception and further handling within the elevator. These issues are of both technical and economic nature.

This implies that the implementation of co-existence and traceability requires action at many stages of the production chain. Which economic consequences do you expect?

The implementation of the EU traceability and labelling regulation will of course add to the transaction costs between companies in the chain and the costs for analysis and labelling within the companies. However, we have to remember that in the EU we already have rather comprehensive food and feed documentation. Parts of the GM traceability and labelling will be able to be carried out within this framework – we are not introducing a totally new system.

If an animal was fed with GMOs, the products made from it like cheese or meat do not require labelling in the EU. What would be the economic consequences if such products were to be included?

This will add to the costs of these products, but we are not able to say how much at present. But a guess will be about the same magnitude as for vegetable food products.

The need for co-existence measures is a result from the introduction of GM crops. Does that mean that only GM farmers will have to pay for it?

We are not looking very much into who should pay the extra costs. In reality the market powers of the individual agents will decide how the extra costs and benefits are shared in the end.

How reliable can the food and feed surveillance be before it becomes too expansive?

In my opinion food and feed surveillance today have a high degree of reliability – which they should have – without the cost being prohibitive. Well organised and cost effective surveillance systems can offer high reliability at a reasonable cost level.

Many European consumers refuse GM foods. Are they willing to pay for co-existence?

This is the question to be answered within the next year, we do not yet have our own results from the consumer survey on willingness to pay for non-GM products.

You are talking about costs and benefits of co-existence/traceability measures. What are the benefits?

The benefits are still to be determined, but we talk about issues like more efficient sampling, control and traceability measures as a whole, optimisation of procedures and flows within the company and system, possibilities for entering new markets etc.

What does that mean for farmers and for consumers?

The overall benefit for the consumer is the freedom to choose between GM and non-GM products, and for the farmer it is the opportunity to choose which market to supply.

What purpose will the results of WP3 be used for? Will they help to find a solution for co-existence all stakeholders will be able to agree with?

Hopefully the results from WP3 can help to design cost efficient traceability and labelling procedures which are both acceptable and practical for the producers and consumers.

When can we expect the first results on the costs of co-existence to be published?

We will publish our first results within the next year.